Real Good Food to buy majority stake in Welsh healthy food manufacturer

AIM-quoted food manufacturer Real Good Food is to buy a 84.33% stake in Wales-based Brighter Foods for up to £9m, on a cash and debt free basis.

The consideration will be paid in two instalments of 50% on completion of the deal and 50% on the finalisation of the company's 2017/18 audited accounts, to be paid from its existing debt facilities.

Brighter Foods manufactures snack bars for the healthy snacking market from its factories in Tywyn, Gwynedd in Mid Wales, where it employs 170 full-time staff. It makes partner branded products and has its own healthier brands such as Wild Trail.

Following completion of the acquisition, which is expected to be immediately earnings enhancing, Brighter Foods’ senior management will retain a 15.67% stake in the business.

They will be able to sell 50% of their stake to the Real Good Food after March 2020 and 50% after March 2021 with the consideration for the stake dependent on the profit before interest and tax of Brighter Foods in the years ending 31 March 2020 and 31 March 2021 respectively, and is capped at £8m.

Real Good Food will also be able to buy the senior management stake after March 2021 based on the same valuation.

For the year ended 31 March 2016, Brighter Foods reported a pre-tax profit of £2.3m and had net assets worth £2.7m.

Brighter Foods founder and chief executive Robin Williams, who will remain his position after completion of the deal, said that Real Good Food shares his “vision to invest in the business and to grow it further from the strong base we have established … together we have already agreed a headline plan to continue growing our manufacturing facilities in Tywyn. This is great news for the town and its people”.

Pieter Totté, Real Good Food's executive chairman, added: "Brighter Foods fits well into our strategy to consolidate profitable well run businesses in niche areas of the food manufacturing industry.

“Real Good Food investment will enable Brighter Foods to expand and improve its capacity and product range even further."

Shares in Real Good Food were up 9.28% to 27.32p at 0956 BST.